THE MERCHANDISING RIGHT: FRAGILE THEORY OR FAIT ACCOMPLI?1

Merchandising Right Dogan & Lemley DRAFT

THE MERCHANDISING RIGHT: FRAGILE THEORY OR

FAIT ACCOMPLI?1

Stacey L. Dogan∗ & Mark A. Lemley∗∗

Trademark merchandising is big business. One marketing consultant estimated

the global market for licensing and marketing sports-related merchandise at $17 billion in

2001.2 The college-logo retail market was estimated at $3 billion in 2003.3 The 2002

Salt Lake Olympics generated $500 million in gross sales, and $34 million in licensing

revenues, from sale of “Olympics” attire.4 Even municipal police departments want a

1 © 2005 Stacey L. Dogan & Mark A. Lemley.
∗ Associate Professor of Law, Northeastern University School of Law.
∗∗ William H. Neukom Professor of Law, Stanford Law School; Director, Stanford
Program in Law, Science and Technology; of counsel, Keker & Van Nest LLP. Thanks
to Jamie Boyle, Vince Chiappetta, Rob Denicola, Rochelle Dreyfuss, Paul Goldstein,
Rose Hagan, Tom McCarthy, and participants in a workshop at Stanford Law School for
comments on the project or an earlier draft.
2 ARDI KOLAH, SPORTBUSINESS GROUP, MAXIMISING REVENUE FROM LICENSING AND
MERCHANDISING, at
http://www.sportbusinessassociates.com/sports_reports/Licensing%20and%20Merchandi
sing%20brochure.pdf (last visited Jan. 10, 2005) (also reporting that $200 million of NFL
merchandise was sold in 2001, and that Manchester United earned $36 million from
global merchandising fees).
3 See Jeffrey Zaslow, Sports Fans Snap Up Souvenirs of Winners Beating Losers:
Mascots Boiled or Grilled?, WALL ST. J., Nov. 12, 2003, at A1. Another report recently
estimated that universities collect over $2.5 billion annually in revenues from officially
licensed products. Glenn Bacal & Sean Johnson, Collegiate Trademark Licensing: The
Basic Rules of the Game, Office of General Counsel, Arizona State University, at
http://www.asu.edu/counsel/brief/trademark.html#N_2_ (last updated Nov. 26, 2003); see
also C. Knox Withers, Sine Qua Non: Trademark Infringement, Likelihood of Confusion,
and the Business of Collegiate Licensing, 11 J. INTELL. PROP. L. 421, 422 (2004)
(suggesting $2.7 billion in collegiate revenue).
4 International Olympic Committee, Salt Lake 2002 Licensing, MARKETING MATTERS:

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piece of the action, applying to register their names as trademarks5 and demanding
royalties from television programs designed to evoke their image.6 Want to wear a hat
showing your support for your college or favorite baseball team? Want to wear a T-shirt
emblazoned with the word “Barbie” or the “Harley-Davidson” logo? You may have no
choice but to get an officially licensed piece of gear, at least if trademark owners have
their way.7

THE OLYMPIC MARKETING NEWSLETTER 4, at
http://multimedia.olympic.org/pdf/en_report_456.pdf

5 See, e.g., United States Patent and Trademark Office, Trademark Application Serial
Number 75,791,989 (filed Sept. 2, 1999) (application to register “LAPD” for use on
clothing and children’s clothing); United States Patent and Trademark Office, Trademark
Application Serial Number 76,342,567 (filed Nov. 28, 2001) (opposition pending as of
July 27, 2004) (application to register “NYPD” for use on clothing, housewares and
glasses, furniture, jewelry, keyrings, mousepads, and a host of other merchandise).

6 The New York and Los Angeles police departments have reportedly begun to demand
royalties for the use of the NYPD and LAPD names. According to a New York police
department spokesperson, “‘[w]e’re concerned about the marketing logo, what people do
with it, and what it indicates. If they do [use it] they either enter into an agreement and, if
they don’t, we sue.’” Bridget Byrne, Real Cops on Copyright TV Beat, EONLINE, Aug. 5,
2002, at http://www.eonline.com/News/Items/0,1,10347,00.html; see also Dana Calvo &
Richard Winton, Impersonating an Officer Could Be Costly in Los Angeles; Unlike in the
days of ‘Dragnet,’ two new shows may be charged licensing fees to use the LAPD name,
L.A. TIMES (Calendar), July 31, 2002, at 1 (“In a break with tradition, City Atty. Rocky
Delgadillo has asked the networks that air two new L.A.-based police TV shows to pay
licensing fees or risk legal action, saying the city in the past has ‘basically been lazy
about its intellectual property’ rights under trademark law.”).

7 Trademark holders have not limited their zeal to merchandising cases, but behave
generally as though their rights to their brand names and logos are all but absolute. Some
trademark holders have attempted to sue anyone who makes use of the term, even in
contexts like parody or criticism that pose no threat of consumer confusion, the
traditional touchstone for trademark infringement claims. See Elvis Presley Enters. v.
Capece, 141 F.3d 188 (5th Cir. 1998) (trademark laws used to prevent a theme bar from
calling itself “The Velvet Elvis”); Dr. Seuss Enters. v. Penguin Books USA, 109 F.3d
1394, 1397 (9th Cir. 1997) (trademark laws used to prevent a political satire of the O.J.
Simpson case called “The Cat NOT in the Hat!”); Deere & Co. v. MTD Prods., 41 F.3d
39, 44-45 (2d Cir. 1994) (trademark laws used to prevent a tractor manufacturer from
making fun of its competitor’s logo in an advertisement); Anheuser-Busch v. Balducci
Publications, 28 F.3d 769 (8th Cir. 1994) (trademark laws used to prevent a satirical

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With this much money at stake, it’s no surprise that trademark holders demand
royalties for use of “their” marks on shirts, key chains, jewelry, and related consumer
products. After all, the value of these products comes largely from the allure of the
trademarks, and it seems only fair to reward the party that created that value…doesn’t it?

It turns out that the answer is more complicated than this intuitive account

political advertisement from using the “Michelob” trademark to help make its point);
American Dairy Queen Corp. v. New Line Prods., 35 F. Supp. 2d 727 (D. Minn. 1998)
(trademark laws used to prevent a movie about a Minnesota beauty pageant from using
the title “Dairy Queens”); Ohio Art Co. v. Watts, 49 U.S.P.Q.2d 1957 (N.D. Ohio June
23, 1998); Toho Co. v. William Morrow & Co., 33 F. Supp. 2d 1206 (C.D. Cal. 1998)
(trademark laws used to prevent an author from using the term “Godzilla” in the title of
his book about Godzilla, notwithstanding prominent disclaimers); BellSouth Corp. v.
Internet Classified of Ohio, No. 1:96-CV-0769-CC, slip op. at 29–30 (N.D. Ga. Nov. 12,
1997) (trademark laws used to prevent individuals from setting up web pages critical of a
company or product); Romm Art Creations Ltd. v. Simcha Int’l, 786 F. Supp. 1126
(E.D.N.Y. 1992) (trademark laws used to preclude an artist from painting in the same
style as another); cf. White v. Samsung Elecs. Am., 989 F.2d 1512, 1513 n.6 (9th Cir.
1993) (detailing litigation and settlement of lawsuit seeking to prevent a comic book from
featuring a character known as Hell’s Angel). In still other cases, plaintiffs have tried
without success to prevent a variety of artists, authors, political groups, news agencies,
and others from using their trademarks. See, e.g., New Kids on the Block v. News Am.
Publ’g, 971 F.2d 302 (9th Cir. 1992) (attempt to prevent a newspaper from referring to
the band “New Kids on the Block” in a for-profit telephone poll); Mastercard Int’l v.
Nader 2000 Primary Committee, 70 U.S.P.Q.2d 1046 (S.D.N.Y. 2004) (attempt to enjoin
political speech in a presidential campaign that parodied a trademark); Fox News
Network v. Penguin Group, 31 Media L. Rep. 2254 (S.D.N.Y. Aug. 20, 2003) (attempt to
prevent political humor book from using the phrase “fair and balanced” in its title);
American Family Life Ins. Co. v. Hagan, 266 F. Supp. 2d 682 (N.D. Ohio 2002) (attempt
to enjoin political speech that parodied a trademark); Lyons Partnership v. Giannoulas, 14
F. Supp. 2d 947 (N.D. Tex. 1998) (attempt to prohibit a comedy routine by the San Diego
Chicken in which it beat up a Barney character); Lucasfilm Ltd. v. High Frontier, 622 F.
Supp. 931 (D.D.C. 1985) (attempt to prohibit the use of the term “Star Wars” to describe
the Reagan Administration’s Strategic Defense Initiative); Girl Scouts v. Personality
Posters Mfg., 304 F. Supp. 1228 (S.D.N.Y. 1969) (attempt to enjoin printing, distribution
and sale of a poster showing a pregnant girl in a Girl Scout uniform with the caption “Be
Prepared”). Those suits have been discussed in great deal elsewhere, and they will not
concern us further here. See, e.g., Mark A. Lemley, The Modern Lanham Act and the
Death of Common Sense, 108 YALE L.J. 1687 (1999); Jessica Litman, Breakfast With
Batman: The Public Interest in the Advertising Age, 108 YALE L.J. 1717 (1999); Glynn S.
Lunney, Jr., Trademark Monopolies, 48 EMORY L.J. 367 (1999).

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predicts. Historically, trademark law has existed primarily to protect against the
consumer deception that occurs when one party attempts to pass off its products as those
of another.8 Trademark law makes sense because it promotes the flow of truthful product
information and leads to more efficient and competitive markets. From an economic and
policy perspective, it is by no means obvious that trademark holders should have
exclusive rights over the sale of products that use marks for their ornamental or
“intrinsic” value, rather than as indicators of source or official sponsorship.9 Trademark
law seeks to promote, rather than hinder, truthful competition in markets for products
sought by consumers. If a trademark is the product, giving one party exclusive rights
over it runs in tension with the law’s procompetitive goals—frequently without any
deception-related justification.10 If competition brings the best products to consumers at

8 The law also protects against confusion as to affiliation or sponsorship, but there, too,
the cause of action turns on the existence of confusion in the marketplace. See 2 J.
THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION, § 18.39–
18.40 (describing distinction between “source theory” of protection and “quality theory”
of protection); infra notes 29–31 and accompanying text;. Federal dilution law, which
protects against the “whittling away” or tarnishment of a famous trademark’s
distinctiveness, will rarely come into play in merchandising cases. See infra notes 133-
1–46 and accompanying text.

9 See Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912, 918 (9th Cir.
1980), cert. denied, 452 U.S. 941 (1981) (“It is not uncommon for a name or emblem that
serves in one context as a collective mark or trademark also to be merchandised for its
own intrinsic utility to consumers.”). Of course, trademarks sometimes serve a dual
function, as source identifier and as an integral aesthetic feature of the product. In these
cases, the interests of truthfulness and robust competition run into tension with one
another, and the solution becomes more challenging. We discuss such cases infra notes
99–120 and accompanying text.

10 Imagine, for example, that I am a Dallas Cowboys fan who wants to wear a Cowboys t-
shirt to show my support for the team. In that case, the trademark is an essential part of
the product I’m seeking— I am not looking to buy just any t-shirt, but a t-shirt with
COWBOYS as its defining feature. And I may or may not assume (or care) that the
Cowboys themselves had any relationship to the sale or manufacture of the shirt. See
Robert C. Denicola, Institutional Publicity Rights: An Analysis of the Merchandising of
Famous Trade Symbols, 62 N.C. L. REV. 603, 604 (1984) (noting that items with logos

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the lowest prices, departure from the competitive market requires a compelling
justification.

On the other hand, there may be circumstances in which consumers expect that
trademark holders sponsored or produced the products bearing their mark, in which case
use of the mark by others—even as a part of a product—might result in genuine
confusion.11 When this happens, the procompetitive goal of promoting marketplace
clarity runs in tension with the objective of ensuring competition in product features. At
the very least, the fact that the trademark constitutes part of the product, rather than
purely an indication of source, complicates the analysis, raising a tension between the
dual goals of trademark law.12

Given these complexities, together with the economic interests at stake, it would
be reasonable to expect the law and practice of merchandising rights to be well-settled
and reflect a considered balancing of the interests of trademark holders and their
competitors. In reality, however, much of the multi-billion dollar industry of
merchandise licensing has grown around a handful of cases from the 1970s and 1980s

sell despite their high price relative to other items of similar quality). See generally Alex
Kozinski, Trademarks Unplugged, 68 N.Y.U. L. REV. 960, 961 (1993) (discussing the
“growing tendency to use trademarks not just to identify products but also to enhance or
adorn them, even to create new commodities altogether”).
11 See, e.g., Nat’l Football League Props., Inc. v. New Jersey Giants, Inc., 637 F. Supp.
507, 515 (D.N.J. 1986) (citing a survey showing that up to 67% of football fans were
confused as to the NFL’s sponsorship of GIANTS merchandise); cf. Nat’l Football
League Props., Inc. v. Wichita Falls Sportswear, Inc., 532 F. Supp. 651 (W.D. Wash.
1982) (finding that up to 53.6% of consumers who saw defendant’s replicas of NFL
jerseys believed that the use required permission from the NFL).
12 See Robert G. Bone, Enforcement Costs and Trademark Puzzles, 90 VA. L. REV. 2099,
2154–55, 2169–70 (2004); Denicola, supra note 10, at 611..

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that established merchandising rights with little regard for the competing legal or policy
concerns at stake. Those cases are far from settled law—indeed, many decisions decline
to give trademark owners the right to control sales of their trademarks as products. We
think it is high time to revisit that case law and to reconsider the theoretical justifications
for a merchandising right.

That review provides little support for trademark owners’ assumptions about
merchandising. Doctrinally, the most broad-reaching merchandising cases—which
presumed infringement based on the public recognition of the mark as a trademark13—
were simply wrong in their analysis of trademark infringement and have been specifically
rejected by subsequent decisions.14 Philosophically, even a merchandising right that
hinges on likelihood of confusion raises competition-related concerns that should affect
courts’ analysis of both the merits of and the appropriate remedies in merchandising
cases. Most importantly, recent Supreme Court case law suggests that, if the Supreme
Court had the opportunity to evaluate the merchandising theory (something it has never
done), it would deny the existence of such a right. Further, the Court would be right to
do so. When a trademark is sold, not as a source indicator, but as a desirable feature of a
product, competition suffers—and consumers pay—if other sellers are shut out of the
market for that feature.15 There is accordingly no reason for Congress to step in and

13 “The certain knowledge of the buyer that the source and origin of the trademark
symbols were in the plaintiffs satisfies the requirements of the act.” Boston Professional
Hockey Ass’n, Inc. v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004, 1012 (5th Cir.)
(emphasis added), cert. denied, 423 U.S. 868 (1975).
14 See infra notes 56-63 and accompanying text.

15 Product markets, of course, can be hard to define in these cases, and competition will
not suffer if the trademark is competing as but one of many competing ornamental

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change this trend.

Part I discusses the historical background and general principles of trademark law
and traces the growth of the merchandising right theory from the 1970s through the
present, when the assumption of a merchandising right has become a standard part of
business practice. Part II explores the legal and theoretical viability of such a claim.—
We find the basis for an absolute merchandising right quite weak. The justifications
offered for a merchandising right tend to be circular, and to assume that because it is
possible to capture value by using a brand, the trademark owner must own the right to
control that value. Making this assumption relegates competition and consumer search
costs to secondary status. While the question is not free from doubt, and there are
arguable justifications for limited protection in certain circumstances, the concerns we
discuss in this section do not justify a general merchandising right. Finally, Part III
considers how the Supreme Court would treat the merchandising theory if it were
presented with such a case. Recent Supreme Court trademark cases suggest that the

features on the relevant product. But this scenario seems unlikely in the merchandising
cases. A Dallas Cowboys fan will nott be satisfied with a Washington Redskins t-shirt
instead. If there is an identifiable product market, in the sense that the trademark holder
can command an above-market price because of the feature, the Supreme Court has
suggested that some remedy short of an injunction—such as a disclaimer—is most
appropriate to alleviate any confusion. See, e.g., Bonito Boats, Inc. v. Thunder Craft
Boats, Inc., 489 U.S. 141, 154 (1989); Kellogg Co. v. National Biscuit Co., 305 U.S. 111,
122 (1938); cf. Traffix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 34–35 (2001)
(asserting categorically that trademark protection may not extend to functional features
even if consumers associate them with a particular source). The Court’s refusal to allow
control over product markets applies even in the face of clear evidence of trademark
confusion. See, e.g., Sears, Roebuck & Co. v. Stiffel Co. 376 U.S. 225, 232 (1964)
(“Doubtless a state may, in appropriate circumstances, require that goods, whether
patented or unpatented, be labeled or that other precautionary steps be taken to prevent
customers from being misled as to the source, . . . [b]ut because of the federal patent laws
a State may not . . . prohibit the copying of the article itself or award damages for such
copying.”).

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Court is quite concerned about protecting competition against expansive readings of the
trademark right, an approach that suggests that it would not look kindly on the
merchandising theory.

I. ORIGINS OF THE MERCHANDISING RIGHT: FROM TRADEMARK AS BRAND TO

TRADEMARK AS PRODUCT

A. Trademarks, Confusion, and Competition

“Trademarks have existed for almost as long as trade itself.”16 From the earliest

days in which merchants made and sold goods for consumption by others, sellers have
used names and other symbols to indicate the source of their wares.17 These “marks”

serve an important economic function: they enable sellers to develop reputations for

quality, and they assure customers that products sold under the seller’s brand will live up

to that reputation. Trademarks, in other words, provide convenient, truthful product
information in easily accessible form.18

16 ROBERT MERGES ET AL., INTELLECTUAL PROPERTY IN THE NEW TECHNOLOGICAL AGE
529 (3rd ed. 2003); see also FRANK SCHECHTER, THE HISTORICAL FOUNDATIONS OF THE
LAW RELATING TO TRADEMARKS (1925) (tracing history of trademark law to medieval
times).
17 MERGES ET AL., supra note 16, at 529. We refer to “trademarks” in this paper, but the
law and policies that we discuss apply equally to service marks, which are used to
distinguish the services of one party from those of another. See 45 U.S.C. § 1127 (2000).
18 For a more expansive discussion of the economics of trademark law, see Stacey L.
Dogan & Mark A. Lemley, Trademarks and Consumer Search Costs on the Internet, 43
HOUS. L. REV. 777 (2004); see also WILLIAM LANDES & RICHARD POSNER, THE
ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 167 (2003); Bone, supra note
12, at 2105–08; William Landes & Richard Posner, Trademark Law: An Economic
Perspective, 30 J. L. & ECON. 265, 268–70 (1987); Mark A. Lemley, The Modern

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To fulfill their informational objectives, trademarks require some form of legal
protection. A brand-based assurance of quality would mean nothing if imitators could
apply it to their own products and pass them off as having come from the trademark
holder. The result would be higher search costs for consumers and a disincentive to firms
to invest in goodwill and quality products and services. Trademark law evolved
specifically to avoid this result. Doctrinally, trademark law prevents interlopers from
appropriating trademark holders’ goodwill by using their marks in a way that suggests
some association, affiliation, or sponsorship between the parties or their products.
Economically, trademark law reduces consumer search costs and facilitates investment in
goodwill by protecting the accuracy of trademark-related investments in advertising and
product quality.19

While the reduction of consumer search costs and the encouragement of goodwill
investment represent critical intermediate objectives of the trademark system, neither of
these goals is an end in itself. The law reduces consumer search costs in order to
facilitate the functioning of a competitive marketplace. Informed consumers will make
better-informed purchases, which will increase their overall utility and push producers to

Lanham Act and the Death of Common Sense, 108 YALE L.J. 1687, 1690–93 (1999)
(describing economic justifications for trademarks and advertising). . The informational
function of trademarks is particularly important for products whose salient characteristics
are not evident upon inspection. See, e.g., Bone, supra note 12, at 2107–08.

19 Not all commentators view the by-products of trademark law as desirable. In
particular, an influential scholarly movement in the early 1900s criticized trademark law
for its tendency to encourage wasteful expenditures on advertisements that resulted in
product differentiation and noncompetitive pricing. See, e.g., Ralph S. Brown, Jr.,
Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 YALE
L.J. 1165, 1169 (1948) (“Considering the economic welfare of the community as a
whole, to use up part of the national product persuading people to buy product A rather
than product B appears to be a waste of resources.”); see also Lunney, supra note 7.

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develop better quality products.20 Trademark law, then, aims to promote more
competitive markets by improving the quality of information in those markets.21

Trademark law therefore represents an affirmation of, rather than a departure
from, the competitive model that drives the United States economy. Like antitrust laws,
false advertising laws, and other consumer protection statutes, trademark law both draws
from and reinforces the notion that competitive markets, under ordinary circumstances,
will ensure efficient resource allocation and bring consumers the highest quality products
at the lowest prices.22

The primacy of competition in trademark law stands in stark contrast with other
areas of intellectual property law, which insulate creators from competition in order to
encourage future acts of creation.23 Copyright and patent law offer creators exclusive

20 Indeed, classical economics requires fully informed buyers and sellers as a condition
for a perfectly competitive economy. See Maureen A. O’Rourke, Shaping Competition
on the Internet: Who Owns Product and Pricing Information?, 53 VAND. L. REV. 1965,
1968 (2000) (describing conditions for perfectly competitive market).

21 Cf. Landscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373, 379 (2d Cir. 1997)
(“[T]he Lanham Act must be construed in light of a strong federal policy in favor of
vigorously competitive markets, which is exemplified by the Sherman Act and other anti-
trust laws.”).

22 See generally Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83
TEX. L. REV. (forthcoming 2005).

23 See 17 U.S.C. § 106 (2000) (setting forth exclusive rights of copyright holders); 35
U.S.C. § 271 (2000) (defining exclusive rights of patent holders). The exclusive rights
offered by copyright and patent law do not necessarily give the rights-holder economic
power in any relevant market, because in most cases, the creator’s work faces
competition from other products that serve a similar market demand. See, e.g., 1
HERBERT HOVENKAMP ET AL., IP AND ANTITRUST § 4.2 (2004) (pointing out that most
patents and copyrights do not confer market power in a relevant market). Nonetheless,
the laws give rights-holders the ability to exclude others from copying product features
that consumers may demand for their inherent qualities. And if they succeed in creating
incentives, it is because they permit creators to price in excess of marginal cost.

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economic rights to cure the presumed market failure that would result if copiers could
replicate expressive works and inventions without incurring the costs of their
development.24 As such, these regimes were created specifically to encourage the
creation of intrinsically valuable products. Trademark law quite deliberately does not
serve this goal; both its philosophy and its structure reject the notion that trademark rights
should serve as either an inducement or a reward for the creation of product features that
have inherent—as opposed to source-identifying—value.25

While the reach of trademark law has expanded over the centuries, the law has
generally maintained its emphasis on promoting linguistic clarity and preventing

24 See Wendy J. Gordon, Asymmetric Market Failure and Prisoner’s Dilemma in
Intellectual Property, 17 U. DAYTON L. REV. 853 (1992).

25 See, e.g., Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 34 (2003)
(“‘The Lanham Act,’ we have said, ‘does not exist to reward manufacturers for their
innovation in creating a particular device; that is the purpose of the patent law and its
period of exclusivity.’”) (quoting TrafFix Devices, Inc. v. Marketing Displays, Inc., 532
U.S. 23, 34 (2001)); see also 17 U.S.C. § 1052(e)(5) (2000) (prohibiting the registration
of any trademark that “comprises any matter that, as a whole, is functional”); Qualitex
Co. v. Jacobson Prods Co., Inc., 514 U.S. 159, 164 (1995) (“It is the province of patent
law, not trademark law, to encourage invention by granting inventors a monopoly over
new product designs or functions for a limited time, . . . after which competitors are free
to use the innovation.”). Of course, distinguishing between the inherent and source-
identifying functions of a particular product feature can be daunting. See, e.g., Bone,
supra note 12, at 2166–70 (distinguishing between consumption value and source-
identification function of particular product features).

The structure of trademark law is also ill-suited to protection of appealing product
features. Unlike copyright and patent rights, which expire after a defined term, trademark
law provides protection for as long as the mark serves as a source-indicator. As a result,
when trademark law extends to product features that have intrinsic value, the trademark
holder can obtain a potentially perpetual monopoly over those product features. Cf.
Qualitex, 514 U.S. at 164–65 (“If a product’s functional features could be used as
trademarks, . . . a monopoly over such features could be obtained without regard to
whether they qualify as patents and could be extended forever (because trademarks may
be renewed in perpetuity).”).

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confusion and misinformation in the sales process.26 Initially, trademark law applied
only to word marks, and conferred only the right to prevent competitors from using the
mark on directly competing goods.27 Over time, however, trademark law has expanded
both in subject matter and in scope. Federal trademark and unfair competition law now
extend to product packaging, logos, and even the shape and features of products if
consumers view these features as source-indicators.28 Often consumers do use these
product features to identify source, at least with respect to certain well-known products:
a chocolate aficionado, for example, would recognize immediately the shape and
packaging of a Hershey’s KissTM, and would expect such a morsel to have the distinctive
flavor associated with Hershey’s.

Just as trademark subject matter has expanded, so has the range of uses that can
subject one to an infringement or unfair competition claim.29 From its origins—in which

26 Initially, the law protected only against deception as to “the physical source or origin of
the product or service with which the trademark was used.” 2 MCCARTHY, supra note 8,
§ 18:39. Over time, however, the courts recognized that trademarks could indicate
quality as well as source, and extended protection to marks, such as franchise names, that
indicated some consistent level of quality products or services. Id. § 18:40. Further, the
nationalization and internationalization of sales means that consumers can recognize and
rely upon brands even if they don’t know the actual source of the goods, so long as they
understand that goods with the brand come from a consistent source. The law changed in
1984 to take account of this development. 15 U.S.C. § 1064(3) (2000) (amending
genericness rule to overrule Anti-Monopoly, Inc. v. General Mills Fun Group, 684 F.2d
1316 (9th Cir. 1982). In his treatise, McCarthy characterizes the shift as a move from a
“source theory” of trademark protection toward a “quality theory.” 2 MCCARTHY,
supra note 8, § 18:40.

More recently, Congress created a new right for owners of famous marks, to
prevent uses that “dilute” the distinctiveness of their marks. This right, too, finds some
basis in the search costs rationale. See Dogan & Lemley, supra note 18, at 790–91.

27 Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 412–13 (1916).

28 2 MCCARTHY, supra note 8, § 1:17.

29 The Lanham Act includes separate provisions for “infringement” of registered marks,

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infringement required the use of a similar mark on a directly competing product—
trademark law has expanded to control uses of a trademark on different but related goods
“such that the ordinary buyer would be likely to think there was some connection or
sponsorship between the producers or sellers of goods bearing a similar mark, even
though the goods were non-competitive.”30 Thus, trademark law comes into play
whenever consumers would presume affiliation, sponsorship, or other association
between the trademark holder and another party selling goods under a similar mark.31
The law no longer limits itself to cases of “passing off” goods as manufactured or
produced by the trademark holder.32

In the abstract, neither of these expansions departs from trademark law’s core
focus on facilitating the flow of truthful information and reducing consumer search costs.
If consumers perceive distinctive packaging as an indication of the qualities or source of
the goods inside, then allowing trademark holders to prevent others from using the same
packaging will help consumers cheaply and easily to identify products from a consistent

on the one hand, and unfair competition through the use of confusingly similar symbols
or devices, on the other. Compare 45 U.S.C. § 1114 (2000) (providing a cause of action
for infringement of registered marks), with id. § 1125(a) (setting forth the standards for
an unfair competition claim). For all practical purposes, however, the standards for
infringement and unfair competition are identical, both turning on the existence of
confusion as to affiliation, source, or sponsorship. The only significant difference for
infringement purposes is the burden of proof: registered marks are presumed valid.
30 2 MCCARTHY, supra note 8, § 24:2; see also Bone, supra note 12, at 2144–55.
31 Congress codified this expansion in the Lanham Act, providing a cause of action
against any person who falsely implies an “affiliation, connection or association” with a
trademark holder, or causes confusion “as to the origin, sponsorship, or approval of his or
her goods, services, or commercial activities . . . .” 45 U.S.C. § 1125(a) (2000).
32 More recently, Congress has extended federal trademark law to protect famous marks
against the dilution of their distinctiveness. See infra notes 133–46 and accompanying
text.

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source. Similarly, if consumers view a mark as an indicator of consistent product quality,
particularly in an economic environment in which companies regularly sell a large range
of goods, it makes sense to enjoin confusing uses of the mark by sellers of related
products, since consumers will suffer if their quality expectations are inaccurate.33

In combination, however, extending legal protection both to trade dress and to
confusion based on sponsorship raises unique competition-related concerns that
complicate the effect of such protection on the competitive process. As trademark law
expands to protect not only the brand name for a product, but the product itself, it risks
hindering competition rather than promoting it. If a manufacturer could use trademark
law to prevent the copying of features that made its product superior in form or
craftsmanship, consumers would suffer, because competitors could never enter the
market for those features and drive prices down.34 The move from protecting trademark
as label to trademark as mixed label-and-product, then, can have an ambiguous effect on
competition: while it can potentially reduce search costs by facilitating product
identification and reducing marketplace confusion, it can also directly hinder competition
“on the merits” in the sale of products.

Trademark law has so far accommodated these competing concerns in two ways.
First, with respect to product configuration (as opposed to packaging) trade dress, the

33 This harm has both short-term and long-term dimensions. In the short term, consumers
may suffer if the quality of a product fails to meet their expectations. Over the long term,
if consumers learn that they cannot count on the trademark as a reliable indicator of
quality, they will have to engage in more costly means of acquiring information about the
quality of products. This latter effect represents the type of increase in consumer search
costs that the trademark laws seek to avoid.

34 See TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 34–35 (2001).

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Supreme Court recently clarified that protection applies only to features that actually, and
demonstrably, indicate source to consumers. To claim trademark protection for a product
feature, the claimant must prove that the feature has acquired secondary meaning, “which
occurs when, ‘in the minds of the public, the primary significance of a [mark] is to
identify the source of the product rather than the product itself.’”35 If a product feature
has achieved this status, the search costs rationale argues in favor of trademark
protection, at least in the absence of a countervailing consideration.36

Second, even if a product feature has acquired secondary meaning, the
“functionality” doctrine precludes protection if “its use as a mark would permit one
competitor (or a group) to interfere with legitimate (non-trademark-related) competition
through actual or potential exclusive use of an important product ingredient.”37 The
Supreme Court views functionality as the ultimate guardian of marketplace competition,
and has, of late, repeatedly emphasized its significance.38 In tandem, the secondary

35 Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 211 (2000) (quoting Inwood
Labs, Inc. v. Ives Labs., Inc., 456 U.S. 851, n.11 (1982)). The trademark holder must
also identify with particularity the features for which it seeks protection. Cf. Maharishi
Hardy Blechman Ltd. v. Abercrombie & Fitch Co., 292 F. Supp. 2d 535, 549–50
(S.D.N.Y. 2003) (rejecting trade dress claim based on product line that reflected
inconsistency in product features).

36 In other words, when a product feature has acquired secondary meaning, there is a risk
that use of the feature by other sellers could confuse consumers as to source or
sponsorship.

37 Qualitex Co. v. Jacobson Prods. Co., Inc., 514 U.S. 159, 170 (1995).

38 See, e.g., TrafFix Devices, 532 U.S. at 34–35 (“The Lanham Act . . . does not protect
trade dress in a functional design simply because an investment has been made to
encourage the public to associate a particular functional feature with a single
manufacturer or seller.”); Qualitex, 514 U.S. at 164 (“The functionality doctrine prevents
trademark law, which seeks to promote competition by protecting a firm’s reputation,
from instead inhibiting legitimate competition by allowing a producer to control a useful
product feature.”) (emphasis added); Two Pesos, Inc. v. Taco Cabana, Inc., 506 U.S. 763,

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meaning requirement and functionality doctrine ensure that trademark law limits feature-
based competition only when consumer expectations suggest that confusion is likely.
Even then the primacy of competition requires that competitors have access to product
features that are necessary to a competitive product market. We mention them here for
two reasons: (1) to emphasize that trademark law should have nothing to say about
behavior that does not tamper with the clarity of information about who makes or
sponsors products; and (2) to reiterate that the law values such clarity only as long as it
serves to promote a more competitive marketplace.

B. The Merchandising Right and Trademark as Product

Against this backdrop, the so-called “merchandising right” is something of an
anomaly. When fans buy t-shirts with the name of their school, team, or rock band, they
are almost always buying a product bearing an established mark entitled to some form of
trademark protection.39 But the mark in these cases is rarely serving the traditional
function of a trademark. Rather than indicating something to the consumer about the
source or sponsorship of a product, the mark is the product, or at least is a critical part of
what makes the product attractive. While the mark may, on occasion, also signal

775 (1992) (stating that the functionality doctrine “serves to assure that competition will
not be stifled by the exhaustion of a limited number of trade dresses”).

39 Typically, the mark has acquired trademark status through use in connection with some
other primary activity, such as baseball entertainment services, educational services, or
music performance. As such, the mark serves as a source-indicator with respect to these
services, and the trademark holder would have the right to prevent use of the mark on
similar services or products.

By contrast, in Japan and increasingly in the United States, people will sometimes
buy t-shirts that display either an invented logo (one that doesn’t in fact brand a real
product) or a random collection of words. The case for merchandising protection for
such invented logos is even weaker than for established trademarks.

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something about the source or sponsorship of the shirt, its function transcends the role of
a traditional trademark. Merchandising cases therefore represent a kind of hybrid
between product configuration and word-based trademark infringement claims: They
generally involve protected marks, but the marks are more product features than brands.

For years, most trademark holders did not complain about such uses of their
marks by unaffiliated parties. The Boston Athletic Association, which had operated the
Boston Marathon since 1897, waited until the mid-1980s to object to the sale of
BOSTON MARATHON merchandise by third parties.40 The University of Pittsburgh
acquiesced in Champion Products’ sale of PITT merchandise from 1936 until 1981, when
it filed a trademark infringement suit.41 It appears that the 1970s and 1980s represented
an era of awakening, in which trademark holders came to realize the economic value of
their marks on merchandise and the revenues that they could earn through licensing if
they were entitled to control the use of those marks.42 In the decades since, the
awakening has only spread, to the point where even municipal police departments are

40 See Boston Athletic Ass’n v. Sullivan, 867 F.2d 22, 24–25 (1st Cir. 1989).
41 See University of Pittsburgh v. Champion Products, Inc., 529 F. Supp. 464 (W.D. Pa.
1982) (noting that University of Pittsburgh failed to object to unlicensed sales of PITT
merchandise from 1936 until 1980); see also University Book Store v. Board of Regents
of University of Wisconsin, 33 U.S.P.Q.2d 1385, 38 [this pincite is wrong] (T.T.A.B.
1994) (noting that University of Wisconsin had, “over the years, tolerated sales and
advertising of goods, including clothing, bearing the marks” it first sought to register in
1988).
42 Some of the sports leagues may have come to this realization a bit earlier. The
National Football League, for example, established NFL Properties in 1963 expressly “to
act as [a] licensing representative for the trademarks and other commercial identifications
of the member clubs.” Nat’l Football League Props., Inc. v. Wichita Falls Sportswear,
Inc., 532 F. Supp. 651, 655 (W.D. Wash. 1982).

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entering the world of trademark licensing.43

C. The Shaky Foundations of the Merchandising Right

What explains the explosive growth of the licensing market for trademark
merchandise? The answer appears to lie in a handful of judicial decisions from the 1970s
and 1980s that emboldened trademark holders to demand payment for merchandise
bearing their marks. At least some of these cases were simply wrong in concluding that a
trademark claim could exist in the absence of confusion over whether the trademark
holder had made or sponsored the merchandise.44 Others reached the more defensible
conclusion that, under the particular facts presented, the use of the mark on merchandise
was likely to confuse consumers.45 In combination, the two lines of cases established a
momentum in favor or trademark holders in the merchandising context.

1975 was a banner year in the law of trademark merchandising. During that year,
both the National Hockey League and the National Football League persuaded courts to
enjoin the sale of unlicensed emblems bearing the marks of their member teams.46 While
the Fifth Circuit NHL case received the most attention, the Illinois state court decision in
the football case offered a more plausible—but more limited—theoretical justification for

43 See supra note 6.
44 Boston Prof’l Hockey Ass’n v. Dallas Cap & Emblem, 510 F.2d 1004, 1012 (5th Cir.
1975).
45 Nat’l Football League Props., Inc. v. Consumer Enters., Inc., 327 N.E.2d 242, 247 (Ill.
App. 1975).
46 Boston Prof’l Hockey, 510 F.2d at1012; Nat’l Football League Props. v. Consumer
Enters., 327 N.E.2d at 247.

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its extension of trademark doctrine.47 Together, the cases likely fueled the interest among
trademark holders in obtaining royalties from the sale of their marks.

In Boston Hockey v. Dallas Cap & Emblem,48 the National Hockey League and
several of its member clubs brought suit to enjoin the manufacture and sale of emblems
bearing their trademarks.49 The district court found no infringement, reasoning that
consumers did not necessarily expect an affiliation between the emblem seller and the
hockey teams,50 and that in any event, the functionality doctrine required competitors to
have access to trademarks that served as ornamental features on products.51

The Fifth Circuit’s reversal broke new theoretical ground and effectively wrote
the confusion requirement out of the Lanham Act. While conceding the centrality of
confusion to trademark infringement claims,52 the court found the district court’s concept
of confusion unduly narrow:

47 See infra notes 62–63 and accompanying text.
48 510 F.2d at 1004.
49 Id. at 1008.
50 Boston Prof’l Hockey Ass’n, Inc. v. Dallas Cap & Emblem Mfg., Inc., 360 F. Supp.
459, 462–63 (N.D. Tex. 1973) (“The test is not whether the products in question are
duplications of their marks, but whether the defendant’s use of the mark would mislead
the public as to the source of the goods.”), rev’d, 510 F.2d 1004 (5th Cir. 1975).
51 Id. at 463; see also id. at 464 (“The marks have achieved intrinsic value to a segment of
the consuming public which may be attracted to their aesthetic features and to their
characteristics as a patch to be used on apparel or for collecting . . . . In this area of the
economy the protection of trademark law must give way to the public policy favoring
free competition.”). Recognizing, however, the possibility that at least some consumers
might assume that the NHL had officially licensed the products, the court entered a
limited injunction requiring a disclaimer of any association between the manufacturer and
the NFL or its teams. Id. at 465.
52 Boston Prof’l Hockey Ass’n, 510 F.2d at 1012.

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It can be said that the public buyer knew that the emblems portrayed the
teams' symbols. Thus, it can be argued, the buyer is not confused or
deceived. This argument misplaces the purpose of the confusion
requirement. The confusion or deceit requirement is met by the fact that
the defendant duplicated the protected trademarks and sold them to the
public knowing that the public would identify them as being the teams'
trademarks. The certain knowledge of the buyer that the source and origin
of the trademark symbols were in plaintiffs satisfies the requirement of the
act. The argument that confusion must be as to the source of the
manufacture of the emblem itself is unpersuasive, where the trademark,
originated by the team, is the triggering mechanism for the sale of the
emblem.53

The court, in other words, presumed actionable confusion based solely on the

consumer’s mental association between the trademark and the trademark holder.

Likelihood of confusion, in the Boston Hockey definition, turns not on whether

consumers have any misperception about where a product comes from or whether the

trademark holder has endorsed it. On this approach, confusion exists by definition if the

trademark comprises “the triggering mechanism” in the sale.54

What justified this shift away from confusion and toward a mental-association-
based approach to trademark infringement? Without specifically addressing the district
court’s analysis of functionality, and while acknowledging that its decision “may slightly
tilt the trademark laws from the purpose of protecting the public to the protection of
business interests of plaintiffs,” the court pointed to “three persuasive points” in support
of its decision.

First, the major commercial value of the emblems is derived from the
efforts of plaintiffs. Second, defendant sought and would have asserted, if
obtained, an exclusive right to make and sell the emblems. Third, the sale
of a reproduction of the trademark itself on an emblem is an accepted use

53 Id. (second emphasis added).
54 Id.

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of such team symbols in connection with the type of activity in which the
business of professional sports is engaged.55
The second point is irrelevant,56 and the third circular: It amounts to arguing that
allowing trademark holders to claim a royalty on merchandise bearing their marks is
desirable because it’s what trademark holders already do.57 None of these explanations
even attempts to address the effect of such a right on consumers, on competitors, or on
the competitiveness of the marketplace as a whole—i.e., on the core values of trademark
law. The court’s justification for departing from those core values quickly collapses to its
first point—defendants are capturing commercial value that ought to belong to the
plaintiffs. The decision—and indeed the merchandising theory altogether—finds its
normative justification in an instinctive reaction against “unjust enrichment.”

Subsequent decisions and commentaries have condemned the Boston Hockey

court’s approach to likelihood of confusion in merchandise cases.58 Rather than

presuming confusion based on the use of a known trademark, many if not most courts

55 Id. at 1011 (emphasis in original).
56 Cf. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 585 & n.18 (1994) (fact that
party had unsuccessfully requested a license to use a copyrighted work should not weigh
against fair use when the work is later used without permission).
57 We address the “existing practices” argument in more detail infra notes 94–120 and
accompanying text.
58 See, e.g., United States v. Giles, 213 F.3d 1247, 1250 (10th Cir. 2000) (criticizing
Boston Hockey for its “reli[ance] upon a novel and overly broad conception of the rights
that a trademark entails”); Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d
912, 919 (9th Cir. 1980) (describing decision as “an extraordinary extension of the
protection heretofore afforded trademark owners”); Bi-Rite Enters, Inc. v. Button Master,
555 F. Supp. 1188, 1193-94 (S.D.N.Y. 1983); see also RALPH BROWN & ROBERT
DENICOLA, CASES IN COPYRIGHT 691 (7th ed. 1998) (noting that “Boston Hockey has
been distinguished and limited in later decisions for its loose interpretation of the
confusion requirement”); Mark A. Kahn, May the Best Merchandise Win: The Law of
Non-Trademark Uses of Sports Logos, 14 MARQ. SPORTS L. REV. 283, 302-09 (2004);
Withers, supra note 3, at 452–53.

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have required trademark holders to establish a genuine likelihood that the use will
confuse consumers as to source, sponsorship, or affiliation.59 Without proof that
consumers view a given use of a trademark as an indication of official sponsorship, these
claims generally fail. In Board of Governors of University of North Carolina v.
Helpingstine,60 for example, the court rejected UNC’s infringement suit against a t-shirt
manufacturer, based on a failure of proof that consumers viewed the shirts as sponsored
by the university:

Given that there is a distinct possibility that individuals who buy
products from Johnny T-Shirt do not base their decision upon whether the
product is sponsored or endorsed by UNC-CH and that Plaintiffs bear the
burden of establishing likelihood of confusion, the court holds that UNC-
CH must meet its burden by showing more than simply the identity of the

59 See, e.g., Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir.
1980); Univ. of Pittsburgh v. Champion Prods., Inc., 529 F. Supp. 464 (W.D. Pa. 1982);
Nat’l Football League Props., Inc. v. Wichita Falls Sportswear, Inc., 532 F. Supp. 651,
659 (W.D. Wash. 1982) (“Likelihood of confusion in a sponsorship context focuses on
the product bearing the allegedly infringing marks and asks whether the public believes
the product bearing the marks originates with or is somehow endorsed or authorized by
the plaintiff.”). The Fifth Circuit itself subsequently adopted this standard and thus
narrowed, at least implicitly, the Boston Hockey holding. See Supreme Assembly, Order
of Rainbow for Girls v. J.H. Ray Jewelry Co., 676 F.2d 1079, 1082 (5th Cir. 1982); Ky.
Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 388 (5th Cir. 1977)
(“Trademark infringement occurs only when the use sought to be enjoined is likely to
confuse purchasers with respect to such things as the product’s source, its endorsement
by the plaintiff, or its connection with the plaintiff.”).

The Restatement of Unfair Competition also impliedly rejects the merchandising
theory, stating in § 25(1) that “one may be subject to liability under the law of trademarks
for the use of a designation that resembles the trademark . . . of another without proof of a
likelihood of confusion only under an applicable antidilution statute.” RESTATEMENT
(THIRD) OF UNFAIR COMPETITION (1995). Comment i then goes on to state that “use . . .
as mere ornamentation on the subsequent user’s goods does not dilute the distinctiveness
of the mark by associating the mark as a symbol of identification with different goods or
services.” Id. § 25 cmt. _.i. Similarly, comment b in § 20 rejects nonconfusion rationales
as applied to ornamentation or product configurations, a category that would seem to
include essentially all merchandising cases. Id. § 20 cmt. b.

60 714 F. Supp. 167 (M.D.N.C. 1989).

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marks. Instead, it must provide evidence establishing that individuals do
make the critical distinction as to sponsorship or endorsement, or direct
evidence of actual confusion.61

Other courts applying the confusion-based standard have similarly rejected the trademark

holder’s claims.62

Of the post-Boston Hockey courts that have found a likelihood of confusion in
merchandising cases, most have based their decisions not on a new general right to
prevent unjust enrichment or control merchandising, but on evidence that the public
actually believed the trademark holder licensed the defendant’s products.63 This form of
“sponsorship confusion” was the theoretical basis for the NFL’s Illinois emblem suit in
1975. While the Illinois court was less than exacting in its analysis of the facts,64 later
rulings in NFL suits have turned upon surveys and other evidence indicating the
widespread belief that team-related jerseys are officially licensed by the League.65

61 Id. at 173 (emphasis added).

62 See, e.g., Int’l Order of Job’s Daughters, 633 F.2d at 919–20; Supreme Assembly,
Order of Rainbow Girls, 676 F.2d at 1083; Univ. of Pittsburgh v. Champion Prods., Inc.,
529 F. Supp. 464 (W.D. Pa. 1982). In a related context, a court recently refused to enjoin
the sale of logos themselves as clip art. See Medic Alert Found. v. Corel Corp., 43 F.
Supp. 2d 933 (N.D. Ill. 1999). The court rejected the claim based on the absence of
consumer confusion. Professor McCarthy endorses this result. 4 MCCARTHY, supra note
8, § 25:52.1.

63 Dr. Ing. h.c.F. Porsche AG v. Universal Brass, Inc., 1995 WL 420816, at *3 (W.D.
Wash. Feb. 23, 1995) (concluding that “actual confusion as to authorization, coupled
with [defendant’s] use of the [trademark registration] symbol, make it such that no
rational trier of fact could find that confusion as to Porsche’s sponsorship is unlikely”);
Wichita Falls Sportswear, Inc., 532 F. Supp. at 659.

64 Nat’l Football League Props., Inc. v. Consumer Enters., Inc., 327 N.E.2d 242, 246–47
(Ill. App. 1975) (basing likelihood of confusion conclusion upon the NFL’s extensive
licensing practices, through which “the buying public has come to associate the
trademark with the sponsorship of the NFL or of the particular team involved”).

65 See, e.g., Wichita Falls Sportswear, Inc., 532 F. Supp. at 659 (“Just as the relevant
inquiry for the establishment of likelihood of confusion in a sponsorship context is the

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Despite a general move away from its broadest reading, however, the residual
effects of Boston Hockey remain, and later decisions sometimes fall back upon its
conclusory language about the right of a trademark holder to control any uses that benefit
from its mark’s goodwill.66 Others, apparently moved by sympathy for the trademark
holder, nominally focus on a likelihood of confusion but stretch the facts or adopt
unsupported assumptions to conclude that consumers presume an association between the
trademark holder and goods bearing its mark and will therefore be confused.67

belief that sponsorship or authorization was granted, the inquiry should be the same in
order to establish secondary meaning.”).

66 See, e.g., Boston Athletic Ass’n v. Sullivan, 867 F.2d 22, 33 (1st Cir. 1989)
(“Defendants’ shirts are clearly designed to take advantage of the Boston Marathon and
to benefit from the good will associated with its promotion by plaintiffs. Defendants thus
obtain a ‘free ride’ at plaintiffs’ expense.”); Univ. of Ga. Athletic Ass’n v. Laite, 756
F.2d 1535, 1547 (11th Cir. 1985) (enjoining use of Battlin’ Bulldog beer, when “the
confusion stems not from the defendant’s unfair competition with the plaintiff’s products,
but from the defendant’s misuse of the plaintiff’s reputation and good will as embodied in
the plaintiff’s mark”); Warner Bros., Inc. v. Gay Toys, Inc., 724 F.2d 327, 334 (2d Cir.
1983) (“It is because of that association, the identification of the toy car with its source,
Warner’s television series, that the toy car is bought by the public. That is enough” for
an infringement claim against an imitator.); Sigma Chi Fraternity v. Sethscot Collection,
2000 WL 34414961, at *9 (S.D. Fla. Aug. 7, 2000) (“the confusion factor is met where,
as here, the registered mark . . . is the triggering mechanism for the sale of the product”);
cf. Univ. Book Store v. Bd. of Regents of Univ. of Wis., 1994 WL 747886, at *8
(T.T.A.B. June 22, 1994) (criticizing the “antiquated view of trademarks as harmful
monopolies which must be rigorously confined within traditional bounds” as “outmoded
and not in accordance with more recent cases”).

67 See Univ. Book Store, 1994 WL 747886, at *10 (acknowledging university’s decades-
long failure to police the use of its mark on merchandise, and nonetheless concluding
(without specific factual support) that “it is undisputed that, to a significant portion of the
relevant public, the subject marks identify applicant as the primary source of its
educational and entertainment services and as the secondary source of the apparel
imprinted with such marks”) (emphasis added). The BAA court accepted this rationale as
an alternative basis for finding infringement based on the unauthorized sale of “Boston
Marathon” t-shirts. Boston Athletic Ass’n, 867 F.2d at 34 (“Given the undisputed facts
that (1) defendants intentionally referred to the Boston Marathon on its shirts, and (2)
purchasers were likely to buy the shirts precisely because of that reference, we think it
fair to presume that purchasers are likely to be confused about the shirt’s source or
sponsorship.”).

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These decisions, and the general uncertainty in the legal landscape surrounding
merchandising rights, have no doubt contributed to trademark holders’ intuition in favor
of a licensing right. But they offer a rather slender reed on which to build an entire new
jurisprudence. A closer look at these cases suggests that trademark holders may be
unduly sanguine in asserting a legal right to control the sale of merchandise bearing their
marks. The fact that courts are at best evenly split as to whether a merchandising right
even exists—and even more dubious of its existence in the absence of consumer
confusion68—makes it all the more surprising that trademark owners, retail businesses
and even government officials simply assume the existence of such a right.69

II. DOES THE MERCHANDISING RIGHT MAKE SENSE?

In this section, we consider the pros and cons of a broad merchandising right, and

conclude that there is no theoretical and little practical justification for such a right. At

best, trademark owners should be entitled to prevent a limited range of merchandising

uses that are likely to confuse consumers. In particular, a non-confusion-based

merchandising right promotes no legitimate policy goal and imposes significant

68 This doctrinal disagreement is not limited to the United States. In Arsenal Football
Club v. Reed, the European Court of Justice established a merchandising right, holding
that if both the marks and the goods sold were identical it did not matter whether
consumers were confused. Case C-206/01, [2003] R.P.C. 9. The U.K. courts initially
refused to give effect to this judgment, but the appeals court ultimately ruled in favor of
Arsenal, thereby recognizing a merchandising right under U.K. law. Arsenal Football
Club v. Reed, [2003] EWCA Civ 96 (Supreme Court of Judicature, Court of Appeal,
Civil Div.).
69 See, e.g., James Cyphers, Companies Join Police in Pursuing T-Shirt Bootleggers,
WALL ST. J., Sept. 4, 1991, at B2 (noting law enforcement actions against the sale of T-
shirts bearing trademarks and logos).

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economic and expressive costs, and therefore should be abandoned. A narrower,
confusion-based merchandising right, on the other hand, deserves closer analysis,
because it has both pro- and anti-competitive effects. In the end, however, we believe
that the importance of competition counsels in favor of a narrower remedy even in these
cases.

A. Goodwill and Free Riding

To begin, we consider the theory of unjust enrichment or free riding that seems to

underlie the instincts of courts and trademark owners in many of the merchandising

cases. Advocates of the merchandising right justify it by referring to the “free riding”

that would occur if competitors could sell t-shirts featuring protected marks. Those

competitors would be “trading on their goodwill,” and therefore presumably taking

something that ought as a matter of right to belong to the trademark owner.70 Courts

sometimes talk loosely about appropriation of a trademark owner’s goodwill as the harm

to be prevented.71 In a related vein, Robert Denicola concludes that while a

merchandising right doesn’t fit well with trademark theory, the trademark owner has a

better claim to own the right than anyone else, and has a “surprisingly strong” claim to

70 Jerre B. Swann & Theodore H. Davis Jr., Dilution, An Idea Whose Time Has Gone:
Brand Equity as Protectable Property, the New/Old Paradigm, 1 J. INTELL. PROP. L. 219,
238 (1994); Marlene B. Hanson & W. Casey Walls, Protecting Trademark Good Will:
The Case for a Federal Standard of Misappropriation, 81 TRADEMARK REP. 480 (1991).
Many would trace this notion back to Frank Schechter, who conceived of trademarks as
property rights long before the notion was in judicial vogue. See Frank I. SchechterThe
Rational Basis of Trademark Protection, 40 HARV. L. REV. 813, 819 (1927).
71 See, e.g., Beacon Mutual Ins. Co. v. OneBeacon Ins., 376 F.3d 8 (1st Cir. 2004); 1-
800 Contacts v. WhenU.com, 309 F. Supp. 2d 467, 506 (S.D.N.Y. 2004) [Comment:
Check case]; Brockum Co. v. Blaylock, 729 F. Supp. 438, 444 (E.D. Pa. 1990) (the
“unlicensed use of the Rolling Stones’ name” on T-shirts “would permit the defendant to
reap where it had not sown”).

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control merchandising using the trademark.72

These justifications are circular and ultimately empty. The moral claim for
ownership of a merchandising right presumes that someone must control this particular
segment of the market.73 If courts begin their analysis on that basis, it might make sense
that the trademark owner is the logical entity to exercise that control.74 But there is no
reason to start from that presumption. Courts do not assume that the trademark owner
has the right to control parodies, criticism, referential uses of the mark, or “uses” of a
mark that call attention to features of competing products.75 Trademark rights have never
given exclusive rights to control all uses of a mark. Instead, they have traditionally given
trademark owners the right only to prevent uses that confuse consumers, or blur the
distinctive significance of the mark, in order to minimize consumer search costs and
facilitate the functioning of large-scale markets. Uses of a mark that don’t raise these
concerns are reserved to the free market. The merchandising theory expands the rights of
trademark owners, giving them a new form of control over uses of “their” mark at the
expense of the background norm of competition.76 That expansion requires some

72 See Denicola, supra note 10, at 640–41.
73 Denicola does not assume this, but rather draws this conclusion based in part on the
risk of overexposure of a mark, which he suggests is a harm mark owners should have a
right to control. Id. But as Lemley has explained elsewhere, this argument has little
force. Mark A. Lemley, Ex Ante versus Ex Post Justifications for Intellectual Property,
71 U. CHI. L. REV. 129, 144–47 (2004).
74 Even then this conclusion is not inexorable. Since consumers are the ultimate
intended beneficiaries of trademark protection, one could argue that it made more sense
to vest such a right in consumers, not producers.
75 For a discussion of nontrademark uses that are protected, see Dogan & Lemley, supra
note 18, at 788-799.
76 As Ralph Brown put it, “competition is copying.” Ralph S. Brown, The Joys of
Copyright, 30 J. COPYRIGHT SOC’Y 477, 481 (1983); see also Robert C. Denicola,

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justification: In a market economy it is not reasonable to simply assume that someone
must own the right to compete in particular ways.77

This justification cannot be found in the notion of “free riding” or appropriation
of goodwill. Those notions too assume rather than demonstrate that someone is entitled
to own a right on which another might free ride.78 No one thinks newspapers are “free
riding” on trade names when they report news about the companies that use those names,
even though one can imagine a world in which the trademark owner licensed such use.
Similarly, we don’t think of gas stations as free riding on competitors when they locate
across the street from that competitor, or of stores free riding on the anchor tenant of a
shopping mall by deciding to lease space in that mall. Companies engaging in all these
activities are free riding in some sense; they are using the name or reputation of another
company without paying. But the world is full of free riding.79 The question is whether a
particular type of conduct causes the kind of harm that trademark law ought to address.80

Freedom to Copy, 108 YALE L.J. 1661, 1661 (1999) (“laws that restrain copying . . .
restrain competition”).

77 See generally Peter Jaffey, Merchandising and the Law of Trade Marks, 3 INTELL.
PROP. Q. 240, 240–42 (1998) (noting that trademark law does not support a general
merchandising right).

78 Mark Lemley deconstructs the idea of free riding as a justification for an intellectual
property regime in Lemley, Free Riding supra note 22. For a discussion with particular
attention to trademark law, see Graeme W. Austin, Trademarks and the Burdened
Imagination, 69 BROOK. L. REV. 827, 845–54 (2004).

79 See Wendy J. Gordon, On Owning Information: Intellectual Property and the
Restitutionary Impulse, 78 VA. L. REV. 149, 167 (1992) (“A culture could not exist if all
free riding were prohibited within it.”); see also TrafFix Devices, Inc. v. Mkting.
Displays, Inc., 532 U.S. 23, 29 (2001) (“In general, unless an intellectual property right
such as a patent or copyright protects an item, it will be subject to copying . . . .
Allowing competitors to copy will have salutary effects in many instances.”).

80 Certainly, free riding may sometimes threaten incentives or distort information in the
marketplace. But the structure of our intellectual property system already addresses these

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Simply announcing that a particular use of a trademark is an improper appropriation of
the trademark owner’s goodwill assumes the conclusion.81

The problem is not simply the absence of a good reason to grant trademark
owners a merchandising right. A merchandising right can actually interfere with the
fundamental goals of trademark law, as we in the next section.

B. Harms of a Broad Merchandising Right

Why not grant trademark owners a right to control merchandising of their logos?

The answer begins with the fundamental justification of trademark law: improving the

functioning of the market by reducing consumer search costs. From a search costs

perspective, a general merchandising right unmoored from confusion conflicts with,

rather than promoting, trademark law’s procompetitive goals. If consumers are not duped

forms of free riding, in a way that strikes a balance between incentive and competition.
Patent and copyright laws, for example, insulate creators from copying creative works or
inventions for a defined term, in order to provide them with an incentive to create works
that ultimately are relegated to the public. Trademark law targets free riding only if it
misleads consumers and thus distorts information in the marketplace. While one might
imagine an argument that a merchandising right helps to provide financial support for
trademark holders’ primary activity, such an argument turns on unfounded assumptions
that such support is necessary and appropriate, and that information-based trademark law
is the best vehicle to provide it. See infra notes 95-98 and accompanying text.
81 Rochelle Dreyfuss has derided such assumptions as “if value, then right.” Rochelle
Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the Pepsi
Generation, 65 NOTRE DAME L. REV. 397, 405 (1990); see also Felix Cohen,
Transcendental Nonsense and the Functional Approach, 35 COLUM. L. REV. 809, 815
(1935) ("The vicious circle inherent in this reasoning is plain. It purports to base legal
protection upon economic value, when, as a matter of actual fact, the economic value of a
sales device depends upon the extent to which it will be legally protected."); William P.
Kratzke, Normative Economic Analysis of Trademark Law, 21 MEMPHIS ST. U. L. REV.
199, 203–04 (1991).

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into believing that a trademark-bearing product was either sponsored or made by the
trademark holder,82 then the quality of product-related information in the marketplace has
not suffered from the use.83 And the overarching goal of market competition will only
gain: the unlicensed product will presumably compete in the marketplace with any
licensed versions, bringing prices down, letting consumers choose higher-quality
products with identical logos, and generally benefiting the consumer. On balance, then,
nonconfusing uses of marks on merchandise serve, rather than impede, competition in the
marketplace, thus promoting the overall goals of trademark and unfair competition law.

Trademark law facilitates market competition by permitting consumers to find
products cheaply and quickly by relating advertising and their own experiences to the
products they buy. An infringement of a trademark is one that increases consumer search
costs, normally by confusing consumers. Trademarks can extend not only to words and
logos, but to trade dress and even the color or shape of a product. But trademark law
does not give rights over an entire product class, because doing so would short-circuit the
very market competition trademark law is supposed to protect.84 Similarly, a

82 Cf. Dr. Ing. h.c.F. Porsche AG v. Universal Brass, Inc., 1995 WL 420816, at *3 (W.D.
Wash. Feb. 23, 1995) (finding confusion based on use of registered Porsche trademark,
together with ® symbol, which suggested official sponsorship by Porsche); Bi-Rite
Enters. Inc. v. Button Master, 555 F. Supp. 1188, 1193–94 (S.D.N.Y. 1983) (suggesting
that confusion as to sponsorship of band paraphernalia may exist when the merchandise
is sold at concerts and other contexts in which consumers may assume official
sponsorship).

83 See, e.g., Bd. of Governors of Univ. of N. C. v. Helpingstine, 714 F. Supp. 167, 173
(M.D.N.C. 1989) (“In essence, the court is skeptical that those individuals who purchase
unlicensed tee-shirts bearing UNC-CH’s marks care one way or the other whether the
University sponsors or endorses such products or whether the products are officially
licensed.”).

84 See, e.g., TrafFix Devices, Inc. v. Mrkting. Displays, Inc., 532 U.S. 23 (2001)
(refusing to extend trademark protection to aspects of products that improve their

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merchandising right would give rights over irreplaceable product features, which
inevitably increases the cost of those products. If only one company controls the sale of
Seattle Seahawks t-shirts, those shirts will cost more and be of worse quality than if the
market competes to provide those shirts.85 Consumers lose something tangible—they pay
more for the shirt, they are unable to express their support for the Seahawks because they
can’t afford the shirt, or they get a lower quality shirt. There must be some reason for the
law to compel that loss.

The Boston Hockey approach has no logical stopping point. It conflicts with the
text of the Lanham Act, which makes infringement turn not on a mental association
between the defendant’s product and the trademark holder, but on confusion, deception,
or mistake.86 More significantly, it leaves courts with no effective standard
fordetermining when a use of a trademark is legal. The merchandising right cases seem
to stem from the unjust enrichment instinct that “if value, then right.”87 But as we have
explained elsewhere, that instinct has no solid basis in public policy.88 It would make
each of the countless “nominative uses” trademark law permits into infringements.89 And

performance); Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205 (2000) (refusing to
protect product configurations as trademarks unless consumers view them as such).
85 See Paul J. Heald, Filling Two Gaps in the Restatement (Third) of Unfair
Competition: Mixed-Use Trademarks and the Problem with Vanna, 47 S.C. L. REV. 783,
788-89 (1996).
86 15 U.S.C. §§ 1114(a), 1125(a) (2000). See generally Stacey L. Dogan, An Exclusive
Right to Evoke, 44 B.C. L. REV. 291 (2003).
87 Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the
Pepsi Generation, 65 NOTRE DAME L. REV. 397, 405 (1990).
88 See Dogan & Lemley, supra note 18, at 122–37; Lemley, supra note 22.
89 See, e.g., New Kids on the Block v. News America Publ’g, 971 F.2d 302 (9th Cir.
1992) (allowing newspaper to use trademark to refer to trademark holder in a consumer

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it would turn trademark law from a right designed to facilitate commerce into a right to
control language, something the courts have repeatedly warned against given its troubling
implications for both competition and free speech.90 College students and football fans
could not support their team unless they paid the required fee.91 Newspapers might be at
risk for using brand names or logos in connection with their stories. Aqua couldn’t sing
the song “Barbie Girl,”92 or Walking Mountain create art using Barbie dolls,93 even
though consumers were not confused. Individuals might even be liable for wearing
tattoos or jewelry containing trademarked logos, or tattoo parlors for applying them.94

poll, even when the newspaper obtained a commercial advantage from the use).

90 See, e.g., CPC Int’l v. Skippy, Inc., 214 F.3d 456 (4th Cir. 2000); Nissan Motor Co. v.
Nissan Computer Corp., 378 F.3d 1002 (9th Cir. 2004). See generally KP Permanent
Make-Up, Inc. v. Lasting Impression I, Inc., 125 S. Ct. 542, 550 (2004) (noting
importance of allowing commercial speakers to use descriptive words even when they
have taken on trademark significance). For a discussion of trademarks and the First
Amendment, see, e.g., Mark A. Lemley & Eugene Volokh, Freedom of Speech and
Injunctions in Intellectual Property Cases, 48 DUKE L.J. 147, 216–24 (1998); see also
Sonia K. Katyal, Anti-Branding (working paper 2005) (discussing the rise of social
movements that rely on the unauthorized use of corporate trademarks in order to provoke
consumer or social commentary, and the risks trademark law poses to free expression if it
suppresses such uses).

91 Cf. Univ. Book Store v. Bd. of Regents of Univ. of Wis., 1994 WL 747886, at *10
(T.T.A.B. June 22, 1994) (prior to applying to register its marks with the Patent and
Trademark Office, “Applicant, like numerous other colleges and universities, permitted
others to sell imprinted merchandise as expressions of community support and
goodwill.”). See generally Jeffrey Zaslow, Colleges Get a Cut From Being Kicked When
They’re Down, WALL ST. J., Nov. 12, 2003, at A1 (describing the increased demand for
“rivalry merchandise” mocking competitors’ mascots, and the growth in licensed
versions of such products in which universities control the message).

92 Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002) (permitting this use).

93 Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003) (permitting
this use).

94 See Thomas F. Cotter & Angela M. Mirabole, Written on the Body: Intellectual
Property Rights in Tattoos, Makeup, and Other Body Art, 10 UCLA ENT. L. REV. 97,
123–31 (2003) (discussing this possibility). Cotter and Mirabole conclude that the
individual would not be liable under current law, and that the tattoo parlor shouldn’t be

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Further, accepting free riding as the basis for a merchandising right would
encourage courts more generally to focus on “free riding” and “trading on goodwill” as
inherent evils,95 and to move toward a presumption of illegality for any use of someone
else’s trademark. Limiting doctrines like “trademark use” and perhaps even “nominative
use” have already proven challenging for courts to apply because of the temptation to
assume that any use of a trademark must necessarily be a bad one. This does not mean
trademark law will lose all its defenses. The First Amendment will continue to protect
certain uses of a trademark, particularly in parody and news reporting. But the structural
limits on the scope of trademark and dilution law are intellectually harder to maintain if
the law simultaneously treats the same marks as pure property rights in the
merchandising context.

To be sure, courts might try to cabin the merchandising right so that it doesn’t
reach desirable uses. But to do so they would need a theory of merchandising control
that is broader than consumer search costs and the avoidance of confusion, but not as
broad as unjust enrichment or appropriation of goodwill. As demonstrated in the
following sections, such a justification for the merchandising right is hard to come by.

either, though the question is closer.
95 A merchandising right seems more like a physical property right than traditional
trademark law does. For criticism of treating trademarks as property, see Mark A.
Lemley, The Modern Lanham Act and the Death of Common Sense, 108 YALE L.J. 1687,
1697 (1999). But the two are not coextensive. It is possible to treat trademarks as
property in certain respects—for example, permitting them to be sold or used as security
interests, see Xuan-Thao N. Nguyen, Bankrupting Trademarks, 37 U.C. DAVIS L. REV.
1267 (2004)—without necessarily extending protection to any use of a logo.

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C. Preserving Existing Expectations

Even absent a good theoretical justification for a broad merchandising right,
advocates might fall back on practical concerns. It seems clear that trademark owners
assume they have a right to control merchandising. Wouldn’t it upset the settled
expectations of those trademark owners to suddenly nullify the right? Similarly, might
consumers be confused if they too believe that any t-shirt bearing a corporate logo is
licensed by the corporation? Trademark owner expectations provide no real reason to
continue a merchandising right, but the law may have to take consumer expectations into
account. It does not need a broad merchandising right to do so, however.

1. Trademark Owner Expectations

The first concern need not detain us long. First, based on our review of the cases
in Part I, it is far from clear that trademark owners are reasonable in assuming the
existence of such a right. The case law support for it has never been strong or
unequivocal. Second, there is no obvious investment that will be lost if the broad
merchandising theory is rejected. Trademark owners won’t lose their protection against
consumer confusion or dilution. Nor can the trademark owner make a plausible case that
a competing sale of, say, Dallas Cowboys hats will weaken the connection between the
mark and the team. True, the Cowboys might make less money than they would if
trademarks were absolute property rights, and they might argue that this “discourages
investment” in football. But so what? The point of trademark law has never been to
maximize profits for trademark owners at the expense of competitors and consumers.
And the investment at issue in these cases is not investment in the quality of the

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underlying product (the team), but investment in merchandising the brand itself. As
Ralph Brown quite sensibly suggested, this is not the goal of the law.96

For similar reasons, we can reject the argument that a merchandising right
provides needed financial support for the trademark owner.97 This is a slightly altered
form of the argument that merchandising rights serve as incentives, an argument that has
been soundly refuted elsewhere.98 Merchandise may be an indirect way of subsidizing
colleges and other trademark owners, though we are skeptical that the argument has much
persuasive force when applied to corporations such as Nike or Coca-Cola rather than to
universities. But if the goal of consumers is to contribute to the school, there are other,
more direct ways of doing so. Indeed, if consumers do in fact value obtaining goods
from the trademark owner itself—perhaps because it supports the school or team—then
we would expect the market to reflect that by developing a distinction between ordinary
merchandise and officially licensed merchandise. This may reflect the best of all worlds,
because consumers will learn whether merchandise is sponsored by the trademark owner
or not, and can choose their goods accordingly.99 The emphasis in merchandising

96 See Ralph S. Brown Jr., Advertising and the Public Interest: Legal Protection of Trade
Symbols, 57 YALE L.J. 1165, 1177–80 (1948). Others have echoed this view. See Felix
Cohen, supra note 78, at 815; Julie E. Cohen, Lochner in Cyberspace: The New
Economic Orthodoxy of Rights Management, 97 MICH. L. REV. 462, 506–14 (1998);
Heald, supra note 82, at 791–92; Litman, supra note 7, at 1718.
97 See, e.g., Withers, supra note 3, at 421 (noting this argument).

98 See, e.g., Veronica J. Cherniak, Comment, Ornamental Use of Trademarks: The
Judicial Development and Economic Implications of an Exclusive Merchandising Right,
69 TUL. L. REV. 1311, 1349–52 (1995). Among other issues, Cherniak notes that unlike
copyrighted works, there is no particular reason to encourage the creation of new
trademarks; that trademark owners already have substantial incentive to invest in their
brands because of the association between those brands and their products; and that there
are other ways for companies to capitalize on the positive value of their goodwill.

99 Scott Kieff even goes so far as to suggest that this distinction can replace copyright,

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inquiries would appropriately shift, then, to whether the defendant had deceptively
suggested that its goods were officially licensed by the trademark holder.100 That is
something within the traditional competence of trademark law, and a task courts are well-
equipped to perform.

2. Consumer Expectations

The consumer concern is a more significant one. It is possible that consumers

have come to expect that San Francisco Giants jerseys are licensed by the Giants, not

because they serve a brand-identifying function, but simply because the law has

sometimes required such a relationship.101 Indeed, the NFL cases discussed above found

because even without copyright customers will voluntarily choose to support favored
artists. F. Scott Kieff, The Case Against Copyright: A Comparative Institutional
Analysis of Intellectual Property Regimes 114 (Oct. 2004) (unpublished manuscript), at
http://ssrn.com/abstract=600802. One does not have to go this far to believe that
consumers may choose to support affinity groups by opting to purchase licensed
products.
100 See Denicola, supra note 10, at 613; see, e.g., Ky. Fried Chicken Corp. v. Diversified
Packing Corp., 549 F.2d 368, 383 (5th Cir. 1977) (finding trademark violation when
defendant’s advertisements contained cartoons similar to plaintiff’s cartoons and called
for customers to “Buy Direct and Save”); Wyatt Earp Enters., Inc. v. Sackman, Inc., 157
F. Supp. 621, 625 (S.D.N.Y. 1958) (enjoining sale of unlicensed costumes whose boxes
were stamped “official outfit”).
101 Rob Denicola cites consumer surveys presented in merchandising cases that support
this conclusion. See Denicola, supra note 73, at 1668 n.37. Perhaps more commonly,
consumers may not necessarily expect sponsorship or affiliation by the trademark holder,
but may assume that the use required the trademark holder’s permission. Some courts
have found this consumer assumption a basis for finding confusion in trademark
infringement suits. See Anheuser-Busch v. Balducci, 28 F.3d 769 (8th Cir. 1994)
(finding parody to constitute trademark infringement where very few people were
actually confused, but a large percentage thought the parodist should have to get
permission); 5 MCCARTHY, supra note 8 at 32:175 (endorsing this approach because
trademark law follows rather than creates consumer expectations). But as other courts
have correctly observed, this confuses a belief about what the law is with a belief as to

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evidence of this. If this expectation exists, consumers may be confused if the law
changes. If so, a law based on eliminating consumer confusion may be obliged to give
trademark owners the right to prevent such uses in order to avoid this confusion.

Or perhaps not. Glynn Lunney derides this sort of confusion argument as
circular102—and of course in some sense it is. The idea that once-legal conduct becomes
illegal simply because the public believes it is illegal seems like bootstrapping.103 Nor
would it justify a general right, rather than one based on particularized findings of
consumer confusion. There are many famous marks and icons for which we have not
granted merchandising rights. No one controls the exclusive right to make “Statue of
Liberty” t-shirts or paperweights, for example. And while consumers might assume a
licensing relationship in the context of some famous marks, particularly in the field of
professional sports,104 there are many more marks for which there is no evidence that

what the relationship between two parties is. Pebble Beach v. Tour 18, Ltd., 155 F.3d
526, 544 (5th Cir. 1998); Major League Baseball Properties, Inc. v. Sed Non Olet
Denarius, Ltd., 817 F.Supp. 1103, 1122–23 (S.D.N.Y.1993) (rejecting a survey for asking
about legal permission), vacated pursuant to settlement, 859 F.Supp. 80 (S.D.N.Y.1994).

102 Lunney, supra note 7, at 397.

103 Some courts have taken the merchandising right so far as to conclude that “consumer
confusion” may occur where consumers are not in fact confused about the relationship
between the two products, but nonetheless believe that the defendant might have needed a
license to use the mark. Anheuser-Busch, Inc. v. Balducci Publ’ns, 28 F.3d 769, 775 (8th
Cir. 1994); accord Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 544–45 (5th Cir.
1998). There are critics of this approach. See Lunney, supra note 7, at 31, 43
(suggesting that this approach is intellectually dishonest); Tyler T. Ochoa, Dr. Seuss, The
Juice and Fair Use: How the Grinch Silenced a Parody, 45 J. COPYRIGHT SOC’Y 546,
624 (1998).

104 The National Football League, in particular, has had considerable success in
establishing that consumers assume it has licensed uses of NFL team logos and other
trademarks. See, e.g., Nat’l Football League v. Governor of the State of Del., 435 F.
Supp. 1372, 1381 (D. Del. 1977) (“Apparently, in this day and age when professional
sports teams franchise pennants, tee-shirts, helmets, drinking glasses and a wide range of

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consumers expect the trademark owner to be the only manufacturer.105 Even if courts
decide they cannot undo what some cases have done in the sports context, there is no
reason to extend the merchandising right any further, since it is hard to find any
theoretical or statutory basis for the property approach to trademarks.106

But if trademark law is committed to basing trademark doctrine on consumer
reactions, we might be stuck with those reactions in particular cases even if bad legal
decisions initially helped create them. The real underlying issue is whether the trademark
law should act here as a creator or as a reflector of societal norms.107 In the context of
likelihood of confusion analysis, trademark law has traditionally adapted itself to reflect
societal norms, rendering a use illegal if but only if it confuses consumers. In other areas,
however, trademark law acts as a norms creator, establishing standards that shape rather
than merely respond to consumer beliefs. The law creates certain limiting doctrines—
genericide, trademark use, and fair use, for example—that constrain the scope of
trademark rights and that exist whether or not the public is aware of them.108

other products, a substantial number of people believe, if not told otherwise, that one
cannot conduct an enterprise of this kind without NFL approval.”).
105 See Denicola, supra note 10, at 612 (“If the NFL successfully establishes a reputation
for aggressively marketing its insignia, we may readily assume its sponsorship of book
bags marked with the logo of the Dallas Cowboys, yet refrain from an analogous
attribution of sponsorship for bags displaying the mascot of the local high school.”); see
also id. (discussing other contexts in which assumption of sponsorship may be more
likely, such as musician-related sales occurring at concert sites rather than at other
locations).
106 Judge Kozinski suggests that a case-by-case balancing approach is appropriate in these
circumstances. See Kozinski, supra note 10, at 971.
107 Graeme Dinwoodie, Trademarks and Territory: Detaching Trademark Law from the
Nation-State, 41 HOUS. L. REV. 885 (2004); Dogan & Lemley, supra note 18 at 784.
108 See Dogan & Lemley, supra note 18, at 784 (discussing the role of trademark law as
a norms creator in creating limiting doctrines like trademark use). The Supreme Court

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Trademark’s norm-creation role is important because it prevents a downward spiral in
which the court focuses on the most gullible consumers, lowering the standards and
expectations of others.109 Rigorous application of these doctrines can affect consumer
perceptions. In effect, the law is leading rather than following consumer expectations.

The merchandising theory presents a difficult problem in choosing between these
functions. On the one hand, the merchandising theory has the effect of expanding the
basic scope of trademark protection beyond its usual bounds. Thus, it seems analogous to
other limiting doctrines that are intrinsic to the law, not dependent on consumer
expectations. As Robert Denicola has pointed out, the role of trademark law as a norms
creator may be especially important in merchandising cases. Unlike the ordinary
trademark case, in which an infringing defendant can simply choose another mark and
compete fairly in the relevant market, “a defendant enjoined from using a well-known
insignia on T-shirts or caps is effectively excluded from the market for such products. It
can sell to no one, including those who care not the slightest whether their Boston Red
Sox cap is licensed or approved.”110 On the other hand, if it is correct that consumers

recently held that the fair use doctrine in trademark law is independent of consumer
confusion—i.e., that a use can be fair even when it might confuse some consumers . KP
Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 125 S. Ct. 542, 550 (2004).

The common law’s tolerance of a certain degree of confusion on the part
of consumers followed from the very fact that in cases like this one an
originally descriptive term was selected to be used as a mark, not to
mention the undesirability of allowing anyone to obtain a complete
monopoly on use of a descriptive term simply by grabbing it first.

Id. In so holding, the Court clearly recognized—and endorsed—the norm-creating role
of trademark law.
109 See Litman, supra note 7, at 1722.
110 Denicola, supra note 10, at 613.

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now believe t-shirts are sponsored by the owner of the logos emblazoned on them, that
assumption seems to fit within the likelihood of confusion analysis as to which trademark
law has traditionally been a norms reflector.

We are inclined to believe that merchandising is a case in which the law should
act as a norms creator, setting aspirational goals rather than responding to current
consumer expectations. In part this is because any consumer confusion is itself an
artifact of legal cases that seemed to create a new merchandising right; arguably it should
be up to the courts, not consumers, to undo the problems a few ill-considered decisions
may have created. This is particularly so when consumers’ belief that the law requires
permission to use a logo may not matter at all to their assessment of the quality of the
merchandise at issue, such as when the product prominently identifies its
manufacturer.111 If individuals don’t “care one way or the other whether the [trademark
holder] sponsors or endorses such products or whether the products are officially
licensed,”112 then the competitive process certainly does not suffer from their assumption
that the use required a license.

Undoubtedly, however, in some cases trademark holders could establish likely
confusion as to sponsorship among people who actually cared about such sponsorship,
and the courts in such cases would have to decide upon appropriate relief. Where there is

111 Cf. Greater Anchorage, Inc. v. Nowell, 974 F.2d 1342 (9th Cir. 1992) (unpublished
table decision) (rejecting merchandising claim when “customers actually believed the
pins were ‘illegal.’ Thus, there is no evidence that people actually believe that
[defendant’s] pins are associated with” plaintiff).

112 Bd. of Governors of Univ. of N.C. v. Helpingstine, 714 F. Supp. 167, 173 (M.D.N.C.
1989); see also Bone, supra note 12, at 2154 (asserting that “most people are unlikely to
be harmed” by confusion over whether merchandise was licensed by a trademark holder).

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such confusion, courts can probably cure it without eliminating competition simply by
requiring a conspicuous disclaimer. Some courts have taken this approach, permitting
merchandising uses but requiring that the user take all reasonable steps to try to reduce
confusion both at the point of purchase and postsale.113 Robert Bone suggests that the
law should aggressively create norms here and declare disclaimers the sole remedy in all
merchandising cases.114 We would not go that far. As we note in the next section, there
may be rare instances of postsale confusion that would not be cured by a disclaimer. But
it is at least a useful starting point.

Three factors persuade us that disclaimers, rather than injunctions against use,

should suffice in most merchandising cases. First, the competition-oriented concerns

discussed above make these cases special and suggest that courts should try, if at all

possible, to address consumer confusion in a way that preserves consumer choice.

Second, given that the vast majority of these cases involve “licensing confusion”—i.e.,

whether the trademark holder officially licensed the use rather than whether it produced,

manufactured, or sold the product—a prominent disclaimer should be more capable of

addressing such confusion than in the typical case of confusion as to the origin of goods.

Finally, disclaimers will facilitate the process of norms-creation: as consumers grow

more accustomed to competition between licensed and unlicensed products, they will

adjust their expectations and make a product’s officially licensed status just another piece

of information that factors into their purchasing decisions.

113 See, e.g., Plasticolor Molded Prods. v. Ford Motor Co., 713 F. Supp. 1329, 1338–39
(C.D. Cal. 1989), vacated by consent judgment, 767 F. Supp. 1036 (C.D. Cal. 1991); see
also Peter E. Mims, Note, Promotional Goods and the Functionality Doctrine: An
Economic Model of Trademarks, 63 TEX. L. REV. 639, 664–69 (1984).
114 Bone, supra note 12, at 2181–85.

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We conclude, therefore, that the fact that consumers may believe trademark
owners have a right to control merchandise bearing their brands does not itself justify a
merchandising right. The issue is certainly not free from doubt, and we can readily
imagine a court concluding that even if the merchandising theory is unpersuasive, the law
has gone too far down that road to turn back now. But even if a court were to take that
position, a limited, likelihood-of-confusion rationale for keeping a bad law intact is quite
different from a theoretical justification for cementing and extending the merchandising
right.

D. The Scope of Counterfeiting Law

A third concern with eliminating the merchandising right is that it might interfere
with efforts to prevent certain types of counterfeiting. Counterfeiting is the canonical
case of trademark infringement. A defendant copies the trademark owner’s brand or
mark and affixes it to goods identical in appearance to the trademarked goods, passing its
own goods off as the trademark owner’s. There is no question that counterfeiting violates
the trademark laws because it confuses consumers; indeed, it is also a crime.115 This
form of passing off has little to do with a merchandising right, since ordinary trademark
law seems perfectly well suited to deal with it.

115 18 U.S.C. § 2320 (2000). It is worth noting, however, that that statute does not
expand trademark liability, but rather provides that all the limitations on and defenses to
the Lanham Act apply to it as well. § 2320(c). At least one court has held that the statute
does not apply to the sale of trademarks as products, rather than as labels for goods that
imitate the trademark holder’s. United States v. Giles, 213 F.3d 1247, 1251 (10th Cir.
2000).

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Suppose, however, that the circumstances of the counterfeit sale are sufficient to
dispel any buyer confusion. The example often cited is a fake Rolex watch bought on the
street corner for $20.116 The buyer of the fake Rolex presumably doesn’t believe he is
getting the real thing. Nonetheless, there seems something intuitively wrong with
permitting the copying of the Rolex trademark, even in circumstances when the buyer
knows what he is getting. Similarly, one might think that sellers of “knock-off” Prada
handbags, Chanel perfumes, or Nike t-shirts are causing harm of some sort to the
trademark owner, even if it is not the classic harm of displaced sales. One benefit of a
merchandising right would be to create a cause of action against those who copy
trademarked goods even in the absence of consumer confusion.

It is worth exploring further the intuition that the copier’s conduct is wrongful.
There seem four possible bases for such an intuition. First, there may be concerns about
actual confusion. Take Nike. Because Nike is an apparel manufacturer, consumers who
see a t-shirt with the familiar “swoosh” on it may well assume that Nike is selling the t-
shirt, even if they really want the shirt because they think the swoosh looks cool, not
because they think Nike makes high-quality clothing. If consumers do in fact think Nike
is selling the t-shirt, the likely legal effect will be that Nike gets control over the swoosh,
at least on clothing.117 This control seems similar to what a merchandising right would
give. But that is an accident of the fact that Nike is an apparel manufacturer, and it is

116 See, e.g., Kozinski, supra note 10, at 964.

117 The issue here is a bit different from the norm creator-norm enforcer distinction we
discussed above. There, the question was whether consumers believed the mark must be
licensed; here it is whether they believe Nike is actually selling the T-shirts. The latter is
closer to the core of consumer confusion, and the law presumably should respond to such
a consumer belief.

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reasonable to assume that they will make and sell t-shirts as well as shoes. A right based
on such actual confusion would not protect Nike against the use of swooshes on
kitchenware; nor would it protect Coca-Cola against the use of its logo on t-shirts. It is
not a merchandising right, but simply an application of traditional principles of consumer
confusion. Further, this sort of traditional confusion may well be dispelled by an
appropriately conspicuous disclaimer.

A second concern that might justify a prohibition against copying of logos is the
fear that even though the buyer is not confused, others might be. Assuming that the $20
fake Rolex looks like the real one, even if the buyer knows that he bought the fake one,
others may not be able to tell the difference. This in turn can cause harm—if people see
Rolexes that don’t tell time well, or break, they may mistakenly attribute the shoddy
quality of the counterfeit goods to the trademark owner. Traditional trademark law deals
with this problem under the rubric of “postsale confusion.” This was the situation in Lois
Sportswear v. Levi Strauss & Co.118 There, Levi Strauss had registered not only its trade
name and its jean labels, but also the pattern of stitching on the back pockets of its jeans.
Lois Sportswear sold jeans with clearly different labels, but with an identical stitching
pattern. The trial court found that there was no evidence of actual confusion by
purchasers, but that nonpurchasers seeing the jeans “worn by a passer-by” would likely
be confused. The Second Circuit held that this postsale confusion constituted trademark
infringement: “The confusion the Act seeks to prevent in this context is that a consumer
seeing the familiar stitching pattern will associate the jeans with [Levis] and that

118 799 F.2d 867 (2d Cir. 1986).

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association will influence his buying decisions.”119 The doctrine of postsale confusion
can take care of a significant number of counterfeiting cases without the need for a
merchandising right. It is important not to assume that any use of a logo will inevitably
confuse viewers after the sale, however. Courts sometimes reject logo counterfeiting
claims where it does not appear likely that consumers will be confused.120

A third concern might exist even in the absence of postsale confusion. For certain
types of goods—called Veblen goods—the value of the good to a consumer is a function
of scarcity and corresponding exclusivity or “snob appeal.” Veblen goods therefore
exhibit a sort of anti-network effect; acquisition of the good by new consumers actually
reduces the value of the good to existing owners.121 Judge Kozinski suggests that for
Veblen goods, exclusive control over merchandising may help preserve the image
consumers want to associate with the goods. Even if neither the buyer nor anyone else
who sees them believes that counterfeit Rolex watches are real, if they proliferate it may
destroy consumer expectations about what it means to wear a Rolex.122 There may
therefore be a loss of social surplus resulting from competition, because counterfeiting a
Veblen good harms consumers of the true Veblen good in a way that counterfeiting a

119 Id. at 872–73; see also Car-Freshner Corp. v. Big Lots Stores, Inc., 314 F. Supp. 2d
145, 153 (N.D.N.Y. 2004).

120 See, e.g., Louis Vuitton Malletier v. Burlington Coat Factory Warehouse Corp., 71
U.S.P.Q.2d 1507, 1512 (S.D.N.Y. 2004) (rejecting claim of counterfeiting of knock-off
handbags where differences made consumers unlikely to be confused).

121 See Stan Liebowitz & Stephen Margolis, Seventeen Famous Economists Weigh in on
Copyright: The Roles of Theory, Empirics, and Network Effects 6 (Dec. 2003)
(unpublished manuscript) (modeling Veblen goods as a form of negative network effect),
available at http://ssrn.com/abstract=488085.

122 Kozinski, supra note 10, at 969–70; accord Richard S. Higgins & Paul H. Rubin,
Counterfeit Goods, 29 J. L. & ECON. 211, 214 (1986).

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non-Veblen good does not.123

We are not fully persuaded that this economic concern justifies the creation of a
merchandising right for Veblen goods. By definition, the counterfeit goods addressed by
this theory are ones that people don’t associate with Rolex; otherwise, they will be
covered under the regular or postsale confusion rationales discussed above. If they don’t
associate the counterfeit goods with Rolex, it is not clear that existing owners of Veblen
goods will be harmed. And consumers of the distinguishable knockoff will clearly
benefit.124 Alternatively, even if this is a valid utilitarian rationale for a merchandising
right, it does not extend beyond Veblen goods to normal goods.

A final concern, and what may really be animating much of the push for
merchandising protection, is an interest in protecting the design of the product itself. It is
no accident that Rolex is the most often used example of counterfeiting, and that many of
the other examples involve the exact duplication of products and not just brand names.
People’s sympathies are naturally aroused by the fact that the defendant is copying the
plaintiff’s product almost exactly. There seems something wrong with the defendant
copying the plaintiff’s design, particularly if the economic effect may be for consumers to
substitute the cheap knock-off for the more expensive genuine product.

We think this final instinct, while understandable, is misplaced. The Lanham Act

123 By contrast, Glynn Lunney questions the economic basis for protecting status-related
goods under trademark law. Lunney, supra note 7, at 404–08, 467–69.
124 Cf. Shelly Branch, Style & Substance: Hermes’s Jelly Ache, WALL ST. J., Apr. 9,
2004, at B1 (describing demand for knockoffs of Hermes handbags known as “jelly
kellys,” and suggesting that Hermes may have squeezed up prices of the knockoffs by
aggressively pursuing sellers).

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is not a design protection statute. U.S. law gives limited protection for the actual design
of a product through design patent law, copyright law, and sui generis protection for
vessel hull designs.125 European law gives somewhat more protection.126 Each of those
laws is animated by a desire to encourage the creation of new designs. Further, each law
is limited in duration, and the designs so protected eventually enter the public domain.
Trademark law, by contrast, is ill-suited to serve as a design protection statute. Its
purposes are consumer protection and information disclosure, not encouraging creativity.
Its protection lasts forever, and does not initially vest with the first creator, but rather the
first to use the design to brand its goods. One of the real risks of the merchandising
theory is precisely that it will subvert the proper goals of trademark law and leave in its
place an ill-tailored, overreaching form of judicial design legislation.

E. Can Dilution Save the Merchandising Right?

Trademark law has recently expanded beyond its traditional scope of likelihood of
confusion to protect the owners of certain famous marks against “dilution.”127 Could
dilution provide a back-door way of obtaining merchandising rights for famous
trademarks? We think it is unlikely, for two reasons.

First, the theoretical basis for a dilution claim does not cover merchandising.
125 See, e.g., 35 U.S.C. §§ 171–73 (2000) (design patent law); 17 U.S.C. § 101 (2000)
(defining “useful article[s]” subject to copyright protection); §§ 1301–32 (Vessel Hull
Protection Act).
126 See Directive, 98/71/EC of the European Parliament and of the Council of 13
October 1998 on the Legal Protection of Designs, 1998 O.J. (L 289) 28.
127 15 U.S.C. § 1125(c) (2000).

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Some have criticized dilution law for treating trademarks as property.128 But, properly
understood, dilution is targeted at reducing consumer search costs just as traditional
trademark law is. Dilution takes two forms: blurring the distinctive significance of a
mark by associating it with lots of different products, and tarnishing the image of the
mark by associating it with unwholesome products. Both blurring and tarnishment can
make it somewhat more difficult for consumers to associate a famous mark with its
owner.

Merchandising uses do not blur the distinctive significance of a mark in the mind
of consumers. Rather, they reinforce it.129 The University of Texas might suffer blurring
of its brand if the color orange and the image of a longhorn with the intertwined letters
“UT” were used as a trademark to sell goods, even goods unrelated to educational
services. But if the logo appears on T-shirts worn by UT fans, that use strengthens the
connection in the minds of the public between the logo and the University.
Merchandising uses are unlikely to create blurring problems.

In certain cases trademark dilution law will protect the owners of famous marks

128 See, e.g., Kenneth L. Port, The “Unnatural” Expansion of Trademark Rights: Is a
Federal Dilution Statute Necessary?, 85 TRADEMARK REP. 525, 552 (1995).
129 Cf. Chris Brown, A Dilution Delusion: The Unjustifiable Protection of Similar
Marks, 72 U. CIN. L. REV. 1023, 1038-39 (2004) (citing psychology evidence that the
mental processing of related uses may actually strengthen rather than blur the brand in
some cases). Brown’s evidence, if valid, may cast some doubt on the theory of blurring
altogether. At the least, it gives us little reason to oppose uses of a mark that actually
elaborate or cement a mental association rather than interfere with it. See also Graeme
W. Austin, Trademarks and the Burdened Imagination, 69 BROOKLYN L. REV. 827, 904-
05 (2004) (arguing that consumers are more thoughtful than trademark law gives them
credit for).

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against the use of their mark in a way that will tarnish the trademark.130 But tarnishment
also requires proof that the defendant used the mark to brand goods, not just that it used
the mark as the subject of a t-shirt.131 For example, if a defendant sells Toyota brand
pornography, those who encounter the use may think less highly of the Toyota brand
name because they subconsciously associate it with pornography, even if they understand
that the car company did not itself sponsor the materials. By contrast, an irate consumer
wearing a t-shirt that says “Toyota sucks” or shows a cartoon character urinating on the
Ford logo isn’t tarnishing the brand in the sense the law cares about. These protest uses
do not interfere with consumers’ association between the logo and the company through
some subconscious pollution. If anything, they strengthen the mental connection
between trademark holder and mark, albeit in a way the company might not like. The use
of logos on merchandise is not actionable as tarnishment, therefore, as long as the point
of the logo is to refer to the trademark owner and not to brand an unrelated product. To
be sure, courts applying the tarnishment doctrine have sometimes used it to target
criticism or derogatory speech about the trademark owner, a result that finds little
justification in the search cost rationale.132 Those courts are clearly mistaken in their
understanding of the doctrine, however, and most courts properly distinguish the two.133

130 See, e.g., Coca-Cola Co. v. Gemini Rising, Inc., 346 F. Supp. 1183, 1186 (E.D.N.Y.
1972) (enjoining use of a poster using the Coca-Cola colors and font that read “Enjoy
Cocaine”).
131 See L.L. Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 26, 31 (1st Cir. 1987)
(defining tarnishment); 4 MCCARTHY, supra note 8, § 24:104 (2004).
132 See, e.g., Deere & Co. v. MTD Prods., Inc., 41 F.3d 39 (2d Cir. 1994).
133 See, e.g., Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003);
MasterCard Int’l Inc. v. Nader 2000 Primary Comm. Inc., 70 U.S.P.Q.2d 1046, 1052–53
(S.D.N.Y. 2004).

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Second, even if dilution theory were somehow stretched to cover merchandising,

as a practical matter the federal dilution statute seems unlikely to provide the kind of

protection against the use of logos that trademark owners desire. First, the Supreme

Court in 2003 construed the statute as requiring trademark owners to prove actual

dilution of the significance of their mark, rather than merely a likelihood of dilution, at

least where the marks were not identical.134 As a practical matter, demonstrating actual

dilution has proven extremely difficult,135 rendering the federal dilution statute of little

practical value to trademark owners. Further, even if the likelihood of dilution standard

were reinstated,136 the dilution law applies only to “commercial use in commerce” of the

mark.137 This test requires use of the mark as a brand in proposing a commercial

transaction,138 something that printing a logo on a T-shirt simply doesn’t do.139 For all of

these reasons, it seems unlikely that trademark owners will be able to use federal dilution

134 Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 433 (2003). The Court twice
distinguished the case of identical marks, but never held that they were subject to the
likelihood of dilution standard.
135 After Moseley, courts frequently rejected dilution claims. See, e.g., Nitro Leisure
Prods., L.L.C. v. Acushnet Co., 341 F.3d 1356 (Fed. Cir. 2003); Kellogg Co. v. Toucan
Golf, Inc., 337 F.3d 616 (6th Cir. 2003); Starbucks Corp. v. Lundberg, 2004 WL
1784753 (D. Or. Aug. 10, 2004); Mastercard Int’l, 70 U.S.P.Q.2d, at 1046 (S.D.N.Y.
2004); HBP, Inc. v. Am. Marine Holdings, Inc., 290 F. Supp. 2d 1320 (M.D. Fla. 2003)
The courts in Gen. Motors Corp. v. Autovation Techs., Inc., 317 F. Supp. 2d 756 (E.D.
Mich. 2004) and 7-Eleven, Inc. v. McEvoy, 300 F. Supp. 2d 352 (D. Md. 2004) did find
actual dilution under the Moseley standard in cases where the trademarks were identical.
See also Savin Corp. v. Savin Group, 2004 WL 2829324, at *7 (2d Cir. Dec. 10, 2004)
(finding identity of marks “circumstantial evidence” of actual dilution).
136 Legislation pending in the House at this writing would do just that. H.R. 683, 109th
Cong., 1st Sess. (2005).
137 15 U.S.C. § 1125(c) (2000).
138 See H.R. REP. No. 104-374, at 8 (1995) (adopting existing constitutional standards of
“commercial speech”).
139 Similarly, H.R. 683 would limit dilution to cases in which the defendant used the
mark as a “designation of source,” which use on a t-shirt doesn’t do. H.R. 683.

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